Asia Pacific IT Sourcing Market Hits All-Time High

Increasing demand for cloud-based services and strong traditional sourcing activity propelled the Asia Pacific sourcing market to a new high in 2017, according to the findings of the 4Q17 ISG Index released by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

For the full year, Asia Pacific’s combined market produced a record US$4.88 billion of ACV, up 19 percent, consisting of US$2.46 billion of as-a-service sourcing, up 21 percent to an all-time high, and US$2.42 billion of traditional sourcing, up 17 percent on a record number of contracts (201).

The rise of as-a-service sourcing was driven by demand for infrastructure-as-a-service (IaaS). While software-as-a-service (SaaS) ACV of US$475 million was modestly ahead of the prior year, IaaS ACV grew 24 percent versus 2016, reaching US$1.98 billion. Traditional sourcing gains were boosted by record information technology outsourcing (ITO) activity. The 157 ITO contracts signed in the region yielded ACV of US$1.94 billion, up a third on the prior year.

By industry, most sectors posted ACV gains in 2017 compared with the prior year. Financial services, energy and retail were especially strong. Financial services combined ACV of US$1.1 billion was up 54 percent on the previous period while the Energy sector grew 92 percent on the back of increased contract activity. Increased investment in IaaS drove combined ACV in the Retail sector to US$234 million, up 34 percent for the period.

In contrast, telecom and media, traditionally the largest sourcing sector in Asia Pacific, saw ACV fall 13 percent, while manufacturing ACV dropped slightly, by 2 percent, despite an increase in the number of traditional sourcing contracts signed in the region.

Globally, the market also saw a strong final quarter, with ACV for the combined market establishing a new record at US$11.3 billion. Global trends reflect those in Asia Pacific, with newer technologies continuing to gain momentum. For the year, combined global ACV reached US$43.3 billion, another record, boosted again by strong activity in IaaS and ITO.

“The Asia Pacific sourcing market has never been healthier,” said Lisa Borden, partner and head of ISG Australia and New Zealand (ANZ). “The demand for all things digital shows no signs of abating, as enterprises embrace these new technologies not only for increased efficiency, but to find new ways to grow and get closer to their customers. The seemingly insatiable digital demand is driving overall market growth, but is not replacing traditional sourcing, which is also growing, thanks in large measure to improving economic conditions.”

Asia Pacific IT Sourcing Market Hits All-Time High was last modified: February 9th, 2018 by Press Release